The broader index of the US markets, the S&P 500, was also higher, but at 1,540 remained around 2.2 per cent below its all-time trading high.

The technology dominated Nasdaq posted an even stronger gain than the two diversified markets, rising 1.3 per cent to 3,224.

The dramatic rebound came even as the broader economy continued to struggle to leave behind the 2008-2009 recession, and the government in Washington battles over how to trim its massive deficit, a legacy of the economic crisis.

Equity investors have been welcoming signs of improvement in the US economy - the latest sign was data showing that growth in the vast US services sector accelerated to its fastest pace in a year in February.

But a big part of the rally that has continued in 2013 without a significant correction is the result of the US Federal Reserve's easy monetary policy and the near zero short-term interest rates since December 2008.

The Dow, which weighs the stock prices of 30 top US companies in a range of industries, and has long been the main gauge of health in the capital markets, was last at these levels in October 2007, the virtual eve before a financial storm engulfed markets.

European markets posted even stronger gains, with London's FTSE 100 up 1.4 per cent to close at a five-year high of 6,432.

German and French markets both rose more than 2 per cent, with the DAX reaching 7,870 and the CAC 40 closing at 3,787.

Domestically, futures trade is pointing to a positive if more subdued opening for the Australian share market.

The ASX SPI 200 futures index was up 20 points to 5,099.

On commodities markets, the price for West Texas intermediate crude rose with the US share market, to $US90.75 a barrel.

Spot gold was trading around $US1,576 dollars an ounce.

The Australian dollar has recovered some more of the ground it has recently lost against the greenback.

Shortly before 9:00am (AEDT) it was worth 102.56 US cents, 78.6 euro cents, 95.7 Japanese yen, 67.8 British pence and $NZ1.234.